With the Senate passing a revised budget resolution last week, President Trump and his administration are kicking off this week with a renewed pitch for tax reform. Trump and Vice President Mike Pence joined the GOP House conference call Sunday, and the president encouraged House Republicans to pass the Senate’s budget so that Congress could prepare to pass tax reform.
“We are on the verge of doing something very, very historic,” Trump said, according to a Republican source.
The problem for those of us watching and wondering what the Trump-Ryan-McConnell tax reform actually looks like is that there’s no bill yet, at least not one the public has seen. That means guesswork based on leaks and signposts from both the administration and Capitol Hill. That’s how we get reports that Republicans are “considering a plan” to cap pre-tax 401(k) contributions or “currently exploring” keeping the top income-tax rate at 39.6 percent.
That’s been in part because the White House has been so vague on what it wants to prioritize in any tax reform package. The administration and Hill leadership have released guidelines about what they want—a simplified code, a net reduction in taxes for middle-class Americans, a lower corporate rate. (The child-tax credit increase has a crucial West Wing advocate, who reportedly will be talking about it Monday in Pennsylvania.) With the budget hurdles all but entirely cleared, the full focus on tax reform will hasten the details of this big, ambitious effort to remake the tax code. Then, it will be up to Republicans and Trump to sell it.
Tax Status Quo For the Wealthy?—Back to that Axios report on the proposal to keep the top rate stable at 39.6 percent. A Republican plan that doesn’t cut taxes for the wealthy—how will Democrats attack it?
In truth, as the Tax Foundation’s Scott Greenberg lays out in a series of tweets, the net effect of all the possible changes to the code Republicans are considering may very well result in a tax cut for the wealthiest Americans, even if their top marginal rate stays where it is.
But if the GOP follows through on not budging on the top rate, it will be a turning point for Republican tax policy, which has maintained since the supply-side revolution in the late 1970s that rates, including and especially the top ones, should come down. It wouldn’t quite be the Steve Bannon-supported rate hike on the wealthy, but it would still be an interesting moment for the Trump GOP.
Trump (Administration) Tweet of the Day
What would your family do w/ a $4,000 raise from the President’s tax cut plan? REPLY & I’ll share your family’s story in the press briefing
— Sarah Sanders (@PressSec) October 23, 2017
Mick Mulvaney, the Trump administration’s budget chief, said Sunday that the White House was no longer trying to balance the budget through spending cuts despite Republican control of Congress.
“I think we have made a decision now within the administration that plan A or part of plan A, which was to try to cut our way to balance, just wasn’t going to get very far in Washington, D.C.,” Mulvaney said on CBS’s Face the Nation. “We’re not going to be able to cut our way to balance.”
The Office of Management and Budget director said that Congress lacked the “political will” to cut spending, pointing to the $54 billion in cuts in the White House’s budget proposal in March. Only about $5 billion of those cuts made it into current congressional proposals, Mulvaney added.
“It’s difficult I think to cut spending in Washington,” he said. “Washington is designed to spend more money.”
Mulvaney said this doesn’t mean the White House is giving up on balancing the budget, but that they would focus on doing so through increasing government revenues. The White House has argued its tax reform package will spur the necessary economic growth to generate those revenues.
One More Thing—According to the White House press pool, Mick Mulvaney was “among those leaving” Trump’s golf club in Northern Virginia Sunday afternoon, where the president spent several hours. The White House has not answered questions about whether Trump played golf there, with or without Mulvaney, and what the two may have discussed. Spokesmen for both the White House and the OMB did not provide a comment.
2018 Watch—My colleague John McCormack has an excellent profile of Arizona senator Jeff Flake in the new issue of the magazine. The Republican first-termer, who is in real trouble both in the GOP primary and (if he makes it) in the general election next year, represents a different kind of Republicanism than the president he’s been very critical of. Here’s an excerpt:
Read the whole thing here.
A Good Question—Jay Nordlinger at National Review Online asks, “Why is Bill Browder banned from America?” The answer has to do with Vladimir Putin and his anti-freedom thuggery.
In business news, electric car manufacturer and subsidy beneficiary Tesla has reached an agreement with officials in Shanghai to build its next factory there.
“The deal with Shanghai’s government will allow the Silicon Valley auto maker to build a wholly owned factory in the city’s free-trade zone, these people said,” reports the Wall Street Journal. “This arrangement, the first of its kind for a foreign auto maker, could enable Tesla to slash production costs, but it would still likely incur China’s 25% import tariff.”
Seems like fodder for a presidential tweet, at least.
Check out the latest episode of the video podcast Conversations with Bill Kristol, where our editor at large talks with two former elected Republicans, Spencer Abraham and Vin Weber, about the current political situation.
Song of the Day— “The Distance” by Cake
